Saturday, July 21, 2012

Business travel convention coming to Boston - YAHOO!

BOSTON (AP) — As his company aims to emerge from Chapter 11 bankruptcy protection, the head of AMR Corp. and American Airlines Inc. will discuss the airline's restructuring and how it will affect business travel at a business travel industry convention.

Thomas Horton, the chairman, president and CEO of AMR Corp. and American Airlines is one of many industry leaders who will participate in the four-day Global Business Travel Association convention, beginning Sunday in Boston.

American Airlines filed for Chapter 11 bankruptcy protection in November. Horton said this month that the company has upped revenue and reached deals with labor unions that will cut costs. In a letter to employees, he said the company will evaluate potential mergers to strengthen its operations.

The Global Business Travel Association will bring together thousands of travel industry leaders, suppliers and managers to discuss challenges, policy trends and potential profit areas during its annual convention.

The convention, which runs through Wednesday, will also feature keynote addresses from former Presidents George W. Bush and Bill Clinton on Tuesday and Wednesday, respectively. "Saturday Night Live" comedian Seth Meyers is slated to speak Monday.

Rebecca Carriero, a spokeswoman for the association, said this marks the first year two former U.S. presidents will speak at the convention. It is unclear what Clinton and Bush will speak about during their addresses.

Clinton previously spoke at the convention in 2009. Michael W. McCormick, the association's executive director and chief operating officer, said the Democrat was asked back because of his "ability to distill global events, making even the most complex situation relatable."

In addition to keynote speeches, the convention will offer industry leader panels and more than 65 education sessions, as well as professional development opportunities before the convention begins.

During the event, thousands of employees from companies across the travel industry, including hotels, airlines and technology firms, will have the opportunity to share their experience and network. More than 400 companies will display their products and services on the convention's expo floor.

Rangers and Southampton have come to a financial agreement over the transfer of Steven Davis to the Barclays Premier League new boys.

The two clubs have agreed an undisclosed fee for the Northern Irishman, reported to be around 800,000.

The midfielder, who has signed a contract until 2016, originally agreed to join Saints earlier this month but a question mark hung over the deal, with Ibrox chief executive Charles Green challenging the legal right of several Rangers players not to transfer their contracts to his newco club.

Davis, Steven Naismith, Jamie Ness, Kyle Lafferty and Steven Whittaker were faced with the prospect of delays to their transfers pending clearance by FIFA.

On the move: Davis will finalise his move to the south coast

The world governing body gave provisional clearance to Ness to commence his career at Stoke, while the Scottish Football Association confirmed clearance had also been granted to Lafferty, Whittaker and Naismith for their respective moves.

However, Southampton were happy to forgo any intervention from FIFA and negotiated a deal directly with the Scottish club.

'Saints are pleased to announce that they have reached an agreement with Glasgow Rangers over the transfer of Steven Davis,' read a statement on the club's website.

'Saints' executive chairman Nicola Cortese has now reached a favourable agreement with Rangers that is in the best and fairest interests of all three parties.

'This negates any possible delay in the transfer proceedings and sees Davis' registration transferred to Southampton with immediate effect.

'As part of this alteration to the transfer, Davis' contract with the club will now run until 2016.'

On the move: Davis

Davis, who has been training with Southampton since agreeing to the move on July 6, welcomed the news that the deal was now concluded.

'I'm delighted to get everything sorted,' said Davis. 'There was an element of uncertainty at how long it would take to get the transfer papers through, so I have to give credit to the executive chairman Nicola Cortese for wanting to get it done and removing the need for things to drag on any longer.'

Rangers chief executive Green also expressed his satisfaction that a deal had been reached, telling Rangers' official website: "I am delighted that we have agreed terms over the transfer of Steven Davis.

'Southampton have acted in good faith during the process. We wish them every success and they have signed a player who will undoubtedly make a great contribution to their club - just as he did at Ibrox.'

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Chancellor George Osborne appears to be fast losing the support and confidence of British business as the body representing 100,000 UK firms accuses ministers of a mixture of indecision, equivocation and political short-termism that is choking off economic recovery.

The outspoken attack from the director general of the British Chambers of Commerce, John Longworth, is a severe blow to the chancellor, who faces fresh pressure on Wednesday when official figures are expected to show that the UK's GDP contracted for a third successive quarter between April and June.

Writing in today's Observer, Longworth is savage in his criticism, accusing ministers of making announcements that lack substance and of using "political calculation", rather than economic need, as the driver of policy-making.

His comments, just two weeks after the head of the CBI, John Cridland, tore into ministers for failing to do more to boost infrastructure, show that the traditional close relations between the Tory party and the business community are under intense strain as the economy remains in recession.

Longworth argues that ministers often lecture businesses about taking more risks. But he says it is ministers who must do more to create the climate for investment.

He calls for a new business bank to be established, like those that exist in Germany and the US, to support "bona fide growth companies". "Politicians seem to believe that businesses must be willing and ready to 'strain every sinew', without doing the same themselves," he writes. They should also show greater "statesmanship" and courage to take controversial decisions, such as on the need to expand airport capacity in the south-east. Earlier this month the coalition delayed a consultation on the issue.

"As we noted when the aviation policy paper was announced, businesses are tired of indecision and equivocation. They are tired of political short-termism, electoral calculation, and the privileging of presentation over substance," Longworth writes. "Without sustained, long-term action from government to create a stable business environment here at home, the risk appetite among many businesspeople will remain muted."

Before Wednesday's GDP figures are announced, Howard Archer, of consultancy IHS Global Insight, said he expected a 0.3% fall, and warned that the economy would remain weak for the rest of the year. "We expect UK GDP to be essentially flat overall in 2012, and there is a very real and increasing danger that the economy will contract marginally," he said.

This week Labour leader Ed Miliband will seek to put himself at the head of new efforts in the EU to boost youth employment when he will be the first senior British politician to meet French president François Hollande at the Elysée Palace on Tuesday. A Labour source said: "We now need to work together to have a coordinated plan for jobs and growth. We cannot allow the future of the European continent to sit idle because of the failure to deliver the jobs young people need."

In the UK, weak growth has undermined the coalition's attempt to bring the deficit under control. The latest official public finance data, released on Friday, showed that the shortfall from April to June was almost £7bn larger than in the same period last year, excluding one-off quirks such as the transfer of assets from the Royal Mail pension fund. Analysts said that made it increasingly likely Osborne would miss his deficit target for the current financial year.

Pierre Williams, spokesman for the Federation of Small Businesses, echoed Longworth's frustration. "It's the number one concern of small businesses that they're not getting the loans that they need," he said. "We're encouraged by the fact that the government has recognised the problem; but we have not been so encouraged by the schemes they've introduced to rectify it, because they simply haven't worked."

The latest Bank of England data shows that lending to businesses has continued to decline, despite a blizzard of initiatives from the Treasury.

Many analysts believe this is as much because of a collapse of business confidence against the background of the continuing crisis in the eurozone, rather than the banks' unwillingness to lend. Joe Cox, of the Compass campaign group, said: "Businesses are sitting on billions of pounds of savings because they don't trust that the demand is there to make it worth them investing – there can be no bigger indictment of Osborne's economic management than that."

On Saturday a spokesman for the business secretary, Vince Cable, who said in a Financial Times interview that he had not ruled out leading his party again, insisted he was fully in agreement with the coalition's broad economic policy and was working well with Osborne.

Cable, while a strong supporter of the coalition's deficit-cutting policy, has long argued that more should be done to boost infrastructure spending, particularly on housing. In February he wrote to David Cameron and his Lib Dem deputy Nick Clegg, saying the government lacked "a compelling vision of where the country is heading beyond sorting out the fiscal mess". He is now said to believe the government is moving in the right direction, with announcements such as last week's plan for a £9bn boost to rail investment. In his FT interview, Cable said he thought Clegg was "doing a good job".

However he refused to deny a lingering ambition to lead his party. "I don't exclude it – who knows what might happen in the future," he said. He also told the paper that the "worship of youth" was subsiding, in an apparent dig at those leading the two coalition parties. A friend of Cable said: "Dr Cable is on call in case of an emergency."

AFTER the last several years, you don’t need a finance course to know that stocks are risky.

If you’ve looked at the fluctuating value of your own stock portfolio, you already have a visceral understanding of market volatility. These violent ups and downs provide powerful reasons for fleeing stocks — and for buying protection in the form of government bonds, even if their yield is minuscule.

Investors may have absorbed the arguments for avoiding risk so completely that they have lost their taste for it. That’s why a new position paper by Seth J. Masters, chief investment officer of Bernstein Global Wealth Management, is startling. Its title is “The Case for the 20,000 Dow.”

On Friday, the Dow closed below 12,900. Mr. Masters says it’s time to consider the chances that the Dow will rise by more than 7,000 points — an increase of more than 50 percent. He says the odds of that happening by the end of this decade are excellent.

For long-term investors right now, he says, stocks are a much better bet than bonds. “This argument may seem provocative,” he said in an interview. “But that’s only because market conditions are so unusual, and so many people have become so pessimistic.”

That pessimism is grounded in recent history, he acknowledged. The stock market is extremely volatile now, and stocks are being battered for all kinds of reasons. Take your pick. At the moment, major banks are being investigated for rigging interest rates. In the United States, the economy has hit a soft patch, and in a nasty election season the government is heading toward the so-called fiscal cliff, with spending cuts and tax increases set to take effect automatically at the end of the year.

In much of Europe, the economy has been contracting, and the finances and governance of the euro zone are unstable. On top of all this, in crucial emerging markets like Brazil and China, economic growth is slower than had been expected. And that is just a partial list of the factors weighing on the market. Quite often, stocks have been sinking for no apparent reason at all.

Even so, stocks over the next decade may be less risky, in some respects, than the supposedly safe market for United States Treasuries, Mr. Masters said. His underlying argument is that the world has faced dire conditions before, and markets and economies have bounced back.

“People are acting as though the world is going to end,” he said. “It might end, but we think it won’t, and we think that’s no way to live your life.”

Precisely because bonds are now extraordinarily overvalued and stocks are undervalued, in his view, stocks are extremely likely to outperform bonds over the next decade or two. The Dow Jones industrial average is likely to reach 20,000 during that time — and probably within the next five to 10 years, he said.

“Our projected stock returns may sound optimistic,” he writes. “They’re not. They are well below the long-term average for U.S. and global equities and based on conservative assumptions about economic and market conditions. Bonds, on the other hand, are unlikely to outpace inflation, because current yields are extremely low.”

Bernstein projects 8 percent median annual returns for a diversified portfolio of global and domestic stocks over the next 10 years, versus 2 percent for 10-year Treasuries. At that rate for stocks, “the Dow could hit 20,000 in five to 10 years,” Mr. Masters continues. “In the same time frame, the S.& P. 500, a more representative index, could hit 2,000.”

Annual stock market returns of 8 percent were, until recently, commonplace. At the moment, he concedes, they are not. And, in an interview, he said he was not predicting that stocks would actually rise 8 percent next year or in any given year but instead was presenting a “range of probabilities” for investment returns. “We don’t know where stocks will go,” he said. “And right now they are likely to be extremely volatile, which could feel very unpleasant.”

BUFFERING that volatility makes sense for risk-averse investors, he says. Over the short run, for example, a portfolio that would typically contain 60 percent stocks and 40 percent bonds as a strategic allocation should be ratcheted down to 54 percent stocks and 46 percent bonds. That should reduce portfolio fluctuations. Eventually, though, he says, such a portfolio should return to a more typical stock allocation.

Over 10-year periods since 1900, stocks have outperformed bonds 75 percent of the time, according to Bernstein’s calculations. But today, bond prices are relatively high — their yields, which move in the opposite direction, are extraordinarily low — and stock prices are relatively high. So the firm sees the chance of stocks beating bonds over the next 10 years at 88 percent.

Stocks have been cruel and it is hard to love them now. Still, Mr. Masters writes, “We think that 10 years from now, investors will wish they had stayed in stocks — or added to them.”

"Steal a little," wrote Bob Dylan, "they throw you in jail; steal a lot and they make you a king." These days, he might recraft the line to read: deal a little dope, they throw you in jail; launder the narco billions, they'll make you apologise to the US Senate.

Two months ago in Washington DC, a poor black man called Edward Dorsey Sr was convicted of peddling 5.5 grams of crack cocaine. Because he was charged before a recent relative amelioration in sentencing, he was given a mandatory 10 years in jail.

Last week, managers from Britain's biggest bank, HSBC, lined up before the Senate's permanent sub-committee on investigations – just across the Potomac river from the scene of Dorsey's crime – to be asked questions such as: "It took three or four years to close a suspicious account. Is there any way that should be allowed to happen?"

The "suspicious account" was that of a "casa de cambio", a currency exchange house operated in Mexico on behalf of the largest criminal syndicate in the world and one of the most savage, the Sinaloa drug-trafficking cartel. The dealings had been flagged up to HSBC bosses by an anti-money laundering officer, but to no avail – the dirty business continued. "No, senator," came the reply from a bespectacled Brit called Paul Thurston, chief executive, retail banking and wealth management, HSBC Holdings plc.

The same casa de cambio, called Puebla, was known to be under investigation in another case involving the Wachovia bank during the time HSBC was entertaining its money. US authorities had seized $11m from Wachovia's Miami office, on the way to securing the biggest settlement in banking history with Wachovia in March 2010, detailed in this newspaper last year.

Wachovia was fined $50m and made to surrender $110m in proven drug profits, but was shown to have inadequately monitored a staggering $376bn through the casa de cambio over four years, of which $10bn was in cash. The whistleblower in the case, an Englishman working as an anti-money laundering officer in the bank's London office, Martin Woods, was disciplined for trying to alert his superiors, and won a settlement after bringing a claim for unfair dismissal.

No one from Wachovia went to jail – and, said Woods at the time of the settlement: "These are the proceeds of murder and misery in Mexico, and of drugs sold around the world. But no one goes to jail. What does the settlement do to fight the cartels? Nothing. It encourages the cartels and anyone who wants to make money by laundering their blood dollars."

HSBC has been found to have handled $7bn in narco cash, "and this is the starter for 10", Woods now says. "We'll get the full picture over time. But what's the sanction on these banks? What's their risk? The cartels should renegotiate their charges with the banks. They're being priced for a risk element that isn't there."

Wachovia was not the first, neither will HSBC be the last. Six years ago, a subsidiary of Barclays – Barclays Private Bank – was exposed as having been used to launder drug money from Colombia through five accounts linked to the infamous Medellín cartel. By an ironic twist, Barclays continued to entertain the funds after British police had become involved after a tip-off, from HSBC.

And the issue is wider than drug-money. It is about where banks, law enforcement officers and the regulators – and politics and society generally – want to draw the line between the criminal and supposed "legal" economies, if there is one.

Take the top-drawer bank to the elite and Her Majesty the Queen, Coutts, part of the bailed-out Royal Bank of Scotland. On 23 March, the UK Financial Services Authority issued a final notice to Coutts, fixing a penalty of £8.75m for breach of its money-laundering code.

The FSA reviewed 103 "high-risk customer files" and "identified deficiencies in 73 files", showing "failure to conduct appropriate ongoing monitoring" over three years. In two cases, private bankers involved had "failed to identify serious criminal allegations against those customers". Rory Tapner, chief executive of the wealth division of RBS said that "since concerns were first identified by the FSA, Coutts & Co has enhanced its client relationship management process". The refrain was the same from HSBC last week, and every other bank after every other shameful revelation: we went awry, but we've fixed it.

Wouldn't it be interesting, though, to know Coutts's private view of Wachovia's case – or, at least of people such as Woods who do root out criminal laundering?

As it happens, through a rare glimpse, we do. Last year, the Wachovia whistleblower was offered a job at Coutts. But the bank suddenly withdrew its job offer. An internal email sent by the interviewer to a director of Coutts's wealth management programme explained the bank had "a very generic reason for our decision, citing the fact that we had become aware of an incident at Wachovia, one of Martin Woods's previous employers, and that Coutts was keen to avoid any risk of reputational damage that might relate to the incident".

The thought occurs to Woods, who is taking legal action against Coutts for mistreatment of a whistleblower, that he was too tenacious at Wachovia. Coutts declined to comment.

No one at Coutts was called to account for the FSA's alarming findings. No one was sanctioned under criminal law last month when the ING bank was fined $619m for illegally moving billions of dollars into the US banking system, in breach of sanctions – as HSBC has done with money from North Korea and Iran. Neither were they in 2009, when Lloyds TSB – 43% owned by the British taxpayer – was fined $350m for whitewashing Iranian money into the US. The fines seem huge to us, but banks pay them from petty cash.

If there is a prosecution, it is always "deferred", as with Wachovia, and a Californian bank called Sigue used by HSBC to receive the Mexican drug money. Be good for a year, and we'll forget about it. Since when did the likes of Edward Dorsey of Washington enjoy that kind of leniency?

A foremost trainer of anti-money laundering officers in the US is Robert Mazur, who infiltrated the Medellín cartel during the prosecution and collapse of the BCCI bank in 1991, and who tells the Observer that "the only thing that will make the banks properly vigilant to what is happening is when they hear the rattle of handcuffs in the boardroom".

It remains to be seen whether HSBC's barons will, like Wachovia's, avoid Dorsey's fate.

"People don't like to ask how close the banker's finger is to the trigger of the killer's gun," says Woods.

But in this newspaper – when we revealed the original "cease and desist" order against HSBC – the former head of the UN Office on Drugs and Crime, Antonio Maria Costa, posited that four pillars of the international banking system are: drug-money laundering, sanctions busting, tax evasion and arms trafficking.

The response of politicians is to cower from any serious legal assault on this reality, for the simple reasons that the money is too big (plus consultancies to be had after leaving office). The British government recruits a former chairman of HSBC as trade secretary just as the drug-laundering scandal breaks.

Herein, along with Dylan's dictum, lies the problem. We don't think of those banking barons as the financial services wing of the Sinaloa cartel.

The stark truth is that the cartels' best friends are those people in pin-stripes who, after a rap on the knuckles, return to their golf in Connecticut and drinks parties in Holland Park.

The notion of any dichotomy between the global criminal economy and the "legal" one is fantasy. Worse, it is a lie. They are seamless, mutually interdependent – one and the same.

While telephone companies are noted for being dividend paying stocks, surges in share prices are not expected. Telefonica Brazil ( VIV , quote ) has a dividend income of 3.85% and over the last month of market action, Telefonica Brazil is up 8.10% .

Telefonica Brazil is a wireless communications company based in San Paulo that offers a variety of fixed line and wireless services. It has more than 11 million fixed line customers, 3 million broadband customers and half a million pay television clients. With the World Cup coming to Brazil in 2014 and the Summer Olympics in 2016, infrastructure spending will increase greatly in the country . This will benefit Telefonica Brazil.

In addition to its soaring share price, the stock has other bullish financial indicators. It has a strong profit margin of 15.05%. AT&T ( T , quote ) by contrast, has a profit margin of just 3.44%. Earnings-per-share growth is up by 8.84% this year for Telefonica Brazil. The price-to-earnings ratio is only 8.71.

While the average return-on-equity (ROE) is around 15% for a publicly traded stock, Telefonica Brazil has an ROE of 21.61%. Its debt load is much less burdensome than AT&T's. The payout ratio for its dividend income stream is much smaller than AT&T's, meaning there is more room for dividend growth and stock repurchase plans in the future. This is critical for investors looking for dividend paying stocks.

Now trading around $25.60, the mean analyst target price for Telefonica Brazil over the next year is $29.24. Even with the recent climb in the share price, it is only trading at 11.64% above its 52-week low. Year to date, Telefoncia Brazil is off by 3.21%.

This is a very stable stock. With a beta of 0.56, Telefonica Brazil is almost half as volatile as the stock market as a whole. Research has proven stocks like these to have the highest return over the long term. Telephone company investments are always excellent ways to gain exposure to an emerging market nation in a prudent manner, particularly as dividend paying stocks. The puny short float of just 0.39% shows that there are very few who expect the share price of Telefonica Brazil to fall, even with the recent spike.